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High pay alone has no effect on employees’ exempt/nonexempt FLSA status

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in Employment Law,Human Resources

Under the Fair Labor Standards Act, nonexempt employees such as manual laborers are entitled to overtime pay when they work more than 40 hours in a workweek. That’s true even if they make a lot of money.

Employers can’t assume that because an employee earns more than $100,000 per year and performs some duties that could arguably be considered exempt management tasks, they qualify for the FLSA’s so-called Highly Compensated Exemption (HCE).

Recent case: Two employees who earned more than $100,000 each sued their oil company employer, alleging they were owed overtime pay going back at least two years.

Their employer had classified them as exempt under the HCE exemption based on the assumption that they spent just 10% of their day performing manual labor. Their work involved monitoring pressure gauges and releasing pressure when necessary from oil and gas equipment. They spent much of their time waiting for pressure to rise.

However, they also sometimes made hiring recommendations and performed other administrative tasks.

The court said their case could proceed because neither side had conclusively proven that the HCE exemption did or did not apply. A jury will decide. (Guyton v. Legacy Pressure Control, No. 05-15-CV-1075, WD TX, 2017)

Final note: Don’t assume that high pay equals exempt status. Even under the generous HCE requirement that the employee perform just one management-type task, it’s still the amount of manual work that counts most.

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